Posted 3 years ago on Feb. 9, 2012, 9:53 a.m. EST by flip
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SL: Does focusing on banking and finance as a realm unto itself give us a false sense of the role that finance plays within the larger capitalist system?

DH: Yes, there is a longstanding tradition, among particularly the populist side of the American left, of looking only at finance as bad, as if it was uniquely evil, and treating production as virtuous. I can understand why people might do that in some sense. Corporations do produce goods and services that make it easier for us to live our lives; there's no question about that. But they also are vast engines of exploitation and environmental destruction. The corporation makes its money by paying workers less than the value of what they produce. Although production may look virtuous, there is always going to be that relationship of exploitation, despite the alleged virtue of production.

I think finance kind of isolates, sort of purifies, the purely parasitic relationship of capitalist production. It's all about money -- money expanding into more money. But it hides the fact that the productive sector is all about that as well. The productive sector only engages in production because they make money on it. If they can't make money on it, they're not going to produce. The whole system is about the expansion of money, not about the production of goods and services, or satisfying of consumer demand, or any of those sorts of things you hear about in economics textbooks or the recitations of publicists. SL: Populism, both past and present, is fixated on gold. What's that about?

DH: That's an irony, because the old populists of the 19th century hated the gold standard, for reasons I mentioned earlier. It imposed a tremendous austerity and a general decline in the price level. Which is great if you're a bondholder because it means the value of your bonds is secure. But if you're a worker, that kind of austerity can be brutal. And especially true if you're a farmer or working in a commodity-producing industry, that can be deeply brutal.

But today's rightwing populists love gold. You see that Ron Paul and a lot of those libertarians who intersect with right populists in the Tea Party, but also in the margins of Occupy, want to get the state out of the money business. I'm somewhat taken aback to see signs around Occupy Wall Street that say abolish the Fed. A lot people who don't fully understand what this is all about have picked up on that. Ron Paul at least has a coherent political philosophy. He wants the state out of everything. He doesn't like the Federal Reserve, but he doesn't like Medicare or Social Security either. And that at least is a consistent position, even if it's not very congenial. He wants the state out of the money business. So if you get the Fed out of the money business, if you abolish the Federal Reserve, as he would like to do, he would like to replace it with the gold standard. Libertarians love the gold standard because it's a stateless form of money but also because the supply of gold grows at less than 2% a year. That means that the supply of money could only grow only about 2% a year.

SL: So you couldn't expand the supply of money in a pinch -- in a crisis, for example.

DH: Right. If you had a crisis, that would be absolutely verboten. Which is one of the things the Federal Reserve was created to do, to be more flexible in a crisis. Over the long term, just 2% a year means there's almost no room for any kind of growth if the price level is going to stay stable. It imposes an extremely austere standard. Now, we may want to think about the unsustainability of growth as we experience it now over the long term, for sure, but as long as we're under a capitalist system, slow growth is hellish and faster growth is a little better for the working class. If we want to get to a post-growth economy, we need to get to a post-capitalist economy. But that's certainly not what the likes of Ron Paul want to do. DH: I think not. As I was saying earlier, the financial markets are instruments of class power, they're political instruments. If you want to regulate finance, that means really altering class relations. That's not easy to do. People sometimes speak as if regulating finance is a rather simple thing. I'm not talking about the technicalities of regulating finance -- I don't think those are. I think those technical problems can be overcome. But the problem is that if you're going after finance, you're really going after instruments of ruling class formation and ruling class power. And that's not easily done. If you, for example, wanted to regulate what people call speculation, that means you're really stepping on the toes of the owning class and their ability to move their money around freely. And it's going to take a very, very substantial political mobilization to do something like that. It's not just a technocratic matter; it's a really a deeply political thing.